Snehi,
I think the schema parameter does have to be VER. Many customers will have already made this change when upgrading to TF 9, so for those customers there's no change required. Otherwise, though, and Rohit will correct me if I'm misunderstanding this, but setting this parameter in the schema is what tells the schema to use the version parameter you set in the customizing setting (previously you had to modify the schema each time you upgraded TF). Once done, future upgrades just require changing the customizing setting, which is much easier and less risky.
Regards,
Matt